It's been a couple years since the PCAOB issued an auditing standard so I guess they wanted to squeak something in before this Mayan thing took a hold. Shall we cram this in before the fires start? Yes. Let's.
Here's a piece of the official screed from the Board:
The new standard and related amendments are effective for public company audits of fiscal periods beginning on or after Dec. 15, 2012. Additionally, the SEC determined that the standard and related amendments will apply to audits of "emerging growth companies" under the Jumpstart Our Business Startups Act of 2012."AS 16 supports the critical role of auditors and audit committees in financial reporting," said PCAOB Chairman James R. Doty. "The standard moves the auditor's communication with the audit committee away from compliance checklists, and decisively in the direction of meaningful, effective interchange."
O RLY? Auditing Standard No. 16, Communications with Audit Committees is basically what you would expect. The introduction (paragraphs 1 and 2) is helpful so you kinda get an idea for what you're in for and the objectives are simple enough, but Paragraphs 4 through 11 are a waste, so I suggest skipping all that unless you want a refresher on appointment, retention, and talking audit strategy with board members who probably don't know much about what you do [mimic a gun to your own head here].
The main course is in Results of the Audit (paragraphs 12-24). You can follow this rabbit hole as deep as you want, but to a large extent (and all due respect to Chairman Doty) this is just another checklist in a long line of checklists that auditors check off stuff. Check!
Here's the first one (with footnotes omitted):
12. The auditor should communicate to the audit committee the following matters:Significant accounting policies and practices.(1) Management's initial selection of, or changes in, significant accounting policies or the application of such policies in the current period; and(2) The effect on financial statements or disclosures of significant accounting policies in (i) controversial areas or (ii) areas for which there is a lack of authoritative guidance or consensus, or diversity in practice.
Critical accounting policies and practices. All critical accounting policies and practices to be used, including:(1) The reasons certain policies and practices are considered critical; and(2) How current and anticipated future events might affect the determination of whether certain policies and practices are considered critical.[…]Critical accounting estimates.(1) A description of the process management used to develop critical accounting estimates;(2) Management's significant assumptions used in critical accounting estimates that have a high degree of subjectivity; and(3) Any significant changes management made to the processes used to develop critical accounting estimates or significant assumptions, a description of management's reasons for the changes, and the effects of the changes on the financial statements.Significant unusual transactions.(1) Significant transactions that are outside the normal course of business for the company or that otherwise appear to be unusual due to their timing, size, or nature; and(2) The policies and practices management used to account for significant unusual transactions.
Material Written Communications20. The auditor should communicate to the audit committee other material written communications between the auditor and management.
In other words, discuss whatever you haven't discussed already. It could be anything or everything or nothing. But be careful, because it's all-encompassing requirement, so you'll have to USE YOUR JUDGMENT. On future audit workpapers, this will BE PART OF A CHECKLIST under "Communication with Audit Committee" (or something) and it will say "Other Material Written Communications" (or something) and then you might actually have a box or a few lines where you'll type in anything that wasn't under the specifically itemized checklist items. You will probably have to use it once or twice in your career.
If you're an auditor that works on integrated engagements, I suppose it's worth a look because that's your job and stuff, but I'll save you the trouble — if checklists can be subjected to the Duck Test, AS 16 falls somewhere in between Daffy and Donald.